How the left prospers from prosperity
This paper investigates the relationship between fluctuations in economic growth, unemployment, and voting along a left-right axis. I estimate a model that explains how political fluctuations are caused by economic fluctuations in the OECD countries. I find that higher economic growth causes a shift to the left of policy sentiments. I hold the provision of social insurance by the welfare state to be the key to understanding this relationship. I also find that the relationship changes over the sample period. I hold the tax increase needed to finance the expansion of the welfare state to be the reason for this.
References listed on IDEAS
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- William D. Nordhaus, 1989.
"Alternative Approaches to the Political Business Cycle,"
Cowles Foundation Discussion Papers
927, Cowles Foundation for Research in Economics, Yale University.
- William D. Nordhaus, 1989. "Alternative Approaches to the Political Business Cycle," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 20(2), pages 1-68.
- Jo Thori Lind, 2010.
"Do the Rich Vote Conservative Because They Are Rich?,"
Review of Economics and Institutions,
Università di Perugia, vol. 1(2).
- Lind, Jo Thori, 2006. "Do the rich vote Conservative because they are rich?," Memorandum 02/2006, Oslo University, Department of Economics.
- Meltzer, Allan H & Richard, Scott F, 1981. "A Rational Theory of the Size of Government," Journal of Political Economy, University of Chicago Press, vol. 89(5), pages 914-27, October.
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